Stimulus Ignites Job-Killing Trade War With Canada

by Hans Bader on May 15, 2009

in Blog

The $800 billion stimulus package pushed through by Obama has ignited a trade war with Canada, reports the Washington Post. In response to vague “buy American” provisions in the stimulus, “A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.”

A trade war is also underway with Mexico, thanks to a provision in the stimulus package that blocked a measley 97 Mexican truckers from U.S. roads. That minor NAFTA violation “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs.

Obama’s protectionism echoes Herbert Hoover’s protectionism, which helped spawn the Great Depression. President Hoover signed the Smoot-Hawley tariff, which helped turn a recession into the Great Depression by triggering a trade war with other countries.

Unemployment is now even higher than what Obama predicted it would be without the stimulus. The White House now admits that there will be no job growth until 2010. The Congressional Budget Office repeatedly predicted that the stimulus would shrink the economy “in the long run,” but increase it in the short run, i.e., by the next election.

But so little of the stimulus money has gone into sectors of the economy where unemployment is high (like construction and transportation) that it seems to be doing nothing for the economy even in the short run. The $100 billion it pours into education — a sector where unemployment is very low, and where the U.S. also spends more per capita than almost every other country — appears likely to be wasted. Only 5.9 percent of the stimulus will go to transportation, a small amount compared to the amount of money it showers on state governments, which are using it to continue to provide lucrative pension and health benefits for state employees, whose wages continue to rise much faster than private sector workers.

Obama is following in Herbert Hoover’s footsteps on taxes and spending. In the Great Depression, Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases. One of Obama’s own advisers now says that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compares Obama’s tax increases to those that deepened the Great Depression.

Hoover imposed regressive taxes that burdened consumers, like the Revenue Act of 1932. Obama is now doing the same thing through his proposed $2 trillion cap-and-trade carbon tax. Obama privately admitted to the San Francisco Chronicle (which didn’t report it) that under his “plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s 1932 excise tax increase was. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air. It is also chock full of corporate welfare, regional favoritism, political pay-offs, and give-aways to special interests.

Digital economy increases emissions: Mark Mills gets last laugh

by Marlo Lewis on May 14, 2009

Back in 1999 and 2000, a fierce debate raged as to whether digital networks and devices increase or decrease electricity consumption and emissions.  Does the growth of the digital economy jeopardize the Kyoto agenda by increasing emissions? Or is the Internet a “green” force reducing our energy and carbon intensity?

On one side of the debate, researchers at the Lawrence Berkeley National Laboratory argued that the Internet could help reduce emissions by, for example, promoting telecommuting, online shopping, and efficient supply-chain management. On the other side, technology analyst Mark Mills and co-author Peter Huber argued that the rapid proliferation of digital devices and networks was increasing demand for high-quality (largely coal-based) power.

The Berkeley Lab researchers directed a lot of fire at Mills’s ”ballpark” estimate that Internet-based equipment and networks already accounted for 8% of U.S. electricity demand. I won’t try to settle that part of the controversy.

However, a just-published study by the International Energy Agency (IEA) shows that Mills was right about the big picture. Climatewire (subscription required) gives the gist of the study in its headline: “Soaring electricity use by new electronic devices imperils climate change efforts.” Herewith a few highlights:

  • Efforts by countries worldwide to reduce greenhouse gas emissions and increase energy security are in trouble if nothing is done to check the energy gobbled by both information and communication technologies and consumer electronics.
  • Energy used by computers and consumer electronics will double by 2022 and increase threefold by 2030.
  • The projected increase is equivalent to the current combined total residential electricity consumption of the United States and Japan.
  • To operate these new devices, households around the world will spend around $200 billion in electricity bills and require the addition of approximately 280 Gigawatts (GW) of new generating capacity between now and 2030.
  • The number of people using PCs will exceed 1 billion over the next seven months, and nearly 2 billion television sets are in use worldwide, averaging more than 1.3 sets per each household with access to electricity.
  • More than 3.5 billion people will be mobile phone subscribers by 2010.
  • In many households in OECD countries, electronic devices–a category that includes televisions, desktop computers, laptops, DVD players and recorders, modems, printers, set-top boxes, portable telephones, answering machines, game consoles, audio equipment, clocks, battery chargers, mobile phones and children’s games–consume more electricity than do traditional large appliances.
  • Household use of electronic devices is the major reason that residential electricity consumption is increasing in most countries.
  • Computers, related equipment and consumer electronics are responsible for close to 15 percent of total residential electricity consumption today, a share similar to that of other major appliance categories such as water heating or refrigeration.
  • Even with improvements foreseen in energy efficiency, consumption by electronics in the residential sector is set to increase by 250 percent by 2030.
  • “The share of electricity consumption by these appliances is therefore increasing to the extent that they will most likely comprise the largest end-use category in many countries before 2020, unless effective steps are taken,” said IEA Executive Director Nobuo Tanaka in a press release.
  • “These estimates suggest that total residential electricity consumption will increase more than many previous forecasts, and therefore pose a serious challenge to all governments with policy ambitions to increase energy security and economic development, and to mitigate climate change,” states the report.

Criticism of Huber and Mills got pretty nasty at times. But, as the old adage says: He who laughs last, laughs best.

“Bush holdover” is career civil servant hired during Clinton

by Marlo Lewis on May 14, 2009

Team Obama was embarrassed earlier this week when a leaked interagency memorandum  acknowledged that EPA’s proposed finding that greenouse gases endanger public health and welfare could impose severe economic burdens on small business. The memorandum said, in part: 

 Making the decision to regulate CO2 under the CAA [Clean Air Act] for the first time is likely to have serious economic consequences for regulated entities throughout the U.S. economy, including small businesses and small communities.  Should EPA later extend this finding to stationary sources, small businesses and institutions would be subject to costly regulatory programs such as New Source Review.

An unnamed Administration official dismissed the memo on the grounds that it was written by a “Bush holdover.”

Rep. Darrell Issa (R-CA), Ranking Member on the House Government Reform and Oversight Committee, takes issue with the Administration’s spin on two counts. First, the “holdover” put-down is an ad hominem argument–as if merely being associated with Bush is sufficient to discredit whatever the memo author has to say.

Second, and more importantly, it is untrue! The so-called Bush holdover, Issa reports, is “a career civil servant who was originally hired during the Clinton Administration and worked at one time for a Democratic Member of Congress. Shawne Carter McGibbon is now Acting-Chief Counsel, keeping the office running until a Chief Counsel for Advocacy is confirmed by the Senate.”

Kudos to Mr. Issa for setting the record straight–and to Ms. McGibbon for speaking truth to power.

In the News

by William Yeatman on May 14, 2009

What If Global Warming Fears Are Overblown?
John Birger, Forbes, 14 May 2009

With Congress about to take up sweeping climate-change legislation, expect to hear more in coming weeks from John Christy, director of the Earth System Science Center at University of Alabama-Huntsville.

The Cap-and-Trade Racket
David Frum, The Week, 14 May 2009

Who says Democrats wish to take from the poor to give to the rich? In practice, they much prefer to take from everyone to give to their friends!

Give the Skeptics a Voice, Too
Dr. William Porter, Atlanta Journal Constitution, 14 May 2009

But the science is not settled. If it were, we would have great confidence in all these statements: 1. The world is getting warmer. 2. That’s more bad than good. 3. Humans are causing the warming. 4. We know how to fix the problem.

Adviser Admits Obama’s Tax Increases May Kill Economic Recovery

by Hans Bader on May 14, 2009

in Blog

Harvard economist Martin Feldstein, who has advised Obama, warns that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compares Obama’s tax increases to the ones that contributed to the Great Depression and the “Lost Decade” of economic stagnation and decay in Japan.

Feldstein, who serves on Obama’s economic advisory board, has also “warned of serious inflation and higher taxes down the road” as a result of Obama’s policies.

Feldstein singles out for criticism Obama’s proposed global-warming tax. “Mr. Obama’s biggest proposed tax increase is the cap-and-trade system of requiring businesses to buy carbon dioxide emission permits. . .CBO Director Douglas Elmendorf testified before the Senate Finance Committee on May 7 that the cap-and-trade price increases . . . would cost the average household roughly $1,600 a year, ranging from $700 in the lowest-income quintile to $2,200 in the highest-income quintile.”

That’s a highly regressive tax increase, since lowest-income earners don’t make a third of what highest-income earners make, but they would incur a third as much cost. It’s regressive in the same way as the 1932 excise tax increase by Herbert Hoover that deepened the misery of the Great Depression.

During the Great Depression, Herbert Hoover damaged the economy, and impoverished the American people, with costly, artificial attempts to stimulate the economy through increased government spending, financed by heavy taxes like the Revenue Act of 1932.

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s regressive excise taxes were in 1932. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air.

In reality, Obama’s proposed “cap-and-trade” tax is likely to raise $2 trillion over the next decade, far more than even Feldstein anticipates. That’s far more than the $646 billion the Administration earlier estimated — amounting to at least $3,100 per family per year. And that figure may be dwarfed by the amount of money siphoned from consumers to well-connected corporations that have learned how to game “cap-and-trade” schemes.

In the Great Depression, President Herbert Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases.

In spite of its massive size, Obama’s carbon tax won’t begin to pay for all his spending increases, such as a budget that will generate $4.8 trillion in increased deficits, Obama’s trillion-dollar toxic-asset program, and his $800 billion, economy-shrinking “stimulus” package, all of which contradict Obama’s campaign pledge of a “net spending cut.”

These tax increases are breaches of Obama’s campaign promise not to raise taxes on people making less than $250,000 a year, which he earlier broke by signing into law the regressive SCHIP excise tax increase.

It’s part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he discarded by offering mind-bogglingly large budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.

Three Dems Targeted on Waxman’s Subcommittee

by Paul Chesser, Heartland Institute Correspondent on May 13, 2009

in Blog

The National Wildlife Federation Action Fund, the “grassroots lobbying arm” of NWF (you know, they only educate), announced last week that “hunters and anglers” (as though NWFAF represents that unified group) are running ads in Democrat-held swing districts (PDF) of three congressmen ahead of an upcoming expected vote on the Waxman-Markey cap-and-energy-tax legislation:

“Hunters and anglers want fast action to safeguard natural resources and reduce the effects of climate change in the places where they fish and hunt – places they want to protect for their children and grandchildren,” said Sue Brown, executive director of the National Wildlife Federation Action Fund. “The ads send a clear message that the nation’s sportsmen and women want a strong bill from the committee that will reduce global warming pollution and invest in our natural resources.”

The sportsmen were so incensed that they showed up en masse at Congress’s doorstep:

Dozens of hunters and anglers from across the country visited Capitol Hill, making nearly 100 visits with members of Congress and their staffers and meetings with Administration officials.

How did the representatives (and their staffers) manage to withstand all that political pressure? Almost 100 visits!

Meanwhile the three Congressmen targeted by NWFAF and their casters and shooters are Arkansas’s Mike Ross, Louisiana’s Charlie Melancon, and Utah’s Jim Matheson. All are members of the Subcommittee on Energy and Environment under the Waxman-chaired Energy and Commerce Committee. Here’s what each has said (PDF) recently about Waxman-Markey:

Ross: “If you don’t like $4-a-gallon gasoline, you’re really not going to like your electric bill sometime between now and 2030.”

Melancon: “I believe this bill would create an undue burden on families who are already paying too much in energy bills and on an industry that provides thousands of Louisianians with good jobs.”

Matheson: “The draft bill we are looking at today is a huge piece of legislation,” Matheson said at a hearing recently, bringing up 12 problems he sees with the bill. “It seeks to address an exceptionally complicated issue. I am concerned about moving so quickly.” (Salt Lake Tribune)

NWFAF is running a television ad (“Ducks are coming later; the seasons don’t change like they used to.” — What — are the leaves turning in the spring now?!) in the Little Rock district of Ross, and newspaper ads in Melancon’s (PDF) and Matheson’s (PDF) districts. Word out of DC is that Waxman-Markey has been “watered-down.” Certainly it won’t be enough to alleviate the quoted concerns expressed by the three congressmen.

Massive Energy Tax Taking Shape in Congress

by Myron Ebell on May 13, 2009

Rep. Henry Waxman (D-Beverly Hills), Chairman of the House Energy and Commerce Committee, announced late Tuesday that the full committee would mark up the Waxman-Markey energy rationing bill next week and that he planned to vote the bill out of committee before the Memorial Day recess which begins on 22nd May.  Waxman also released some details of the compromise bill that he and Rep. Edward Markey (D-Mass.) have negotiated with Blue Dog and other moderate Democrats on the committee.

This bill should not be improved; it should be defeated.

Here are some of the key provisions in the new Waxman-Markey compromise energy-rationing bill:

Targets and timetables:

  • 2005 greenhouse gas emissions baseline
  • -17% by 2020
  • -42% by 2030
  • -83% by 2050

Free ration coupons:

  • 35% to local electric distribution companies, phasing out in 10-15 years
  • 15% to energy-intensive industries that compete with imports (steel, cement, paper, etc.), phasing out by 2% per year (as I understand it that would be 13% in year 2, 11% in year 3, etc.)
  • 1% to 5% to oil refineries
  • Remaining coupons would be auctioned.

Sharing the booty:

  • Some revenues raised from auctioning the ration coupons would be dedicated to helping the auto industry and renewable energy.

Renewable requirements for electric utilities:

  • 20% total renewables and efficiency gains
  • 15% renewables by 2020
  • 5% efficiency improvements by 2020
  • With a 3% swing.  For example, 12% renewable plus 8% efficiency gains = 20%.

Threatening a trade war:

The President would be granted authority to levy carbon tariffs beginning in 2025.

Here’s What You Need To Know about the Waxman-Markey Bill

1. It’s a tax.

2. It’s an indirect, hidden, sneaky tax, but it’s a tax.

3. It’s a tax on energy that will raise prices on energy and all goods and services that are produced with or use energy.

4. It’s a tax that will fall more heavily on poorer people because poorer people spend a higher percentage of their incomes on energy than do wealthier people.

5. It’s not a one-time or steady tax, but a tax that will cause energy prices to increase every year.

6. It’s a tax that will destroy jobs in energy-intensive industries, which are concentrated in the States that use coal for electricity.

7. It’s a tax that will raise energy prices more in States that depend on coal for electricity.

8. It’s a tax that will create perpetual economic stagnation.

In the News

by William Yeatman on May 13, 2009

EPA U-Turn: “Endangerment” Might Not Mean Regulation
Ian Talley, Wall Street Journal, 12 May 2009

The head of the U.S. Environmental Protection Agency said Tuesday a finding that carbon dioxide and other greenhouse gases are a public health danger won’t necessarily lead to government regulation of emissions, an apparent about-face for the Obama administration.

The Deep Ecologists
Peter Hannaford, American Spectator, 13 May 2009

America’s “mainstream” media missed it, but April 17 was a red-letter day for its Deep Ecologists. Red letter because it was the day the Obama Administration declared that carbon dioxide and five other gases emitted by industry threaten “the health and welfare of current and future generations.” This opens the door to regulations by the Environmental Protection Agency to “cap” emissions. The Deep Ecologists see this as the path to their cherished dream of a less populous nation with greatly reduced industrial production. It will also lead to a poorer (they would call it “simpler”) standard of living.

Obama’s Anti-Energy Plan
Barry Russell, DC Examiner, 13 May 2009

There’s an old saying among America’s smaller, independent natural gas and oil producers — sometimes called “wildcatters” — that the best way to end up with a million dollars is to start off with a billion.

Government Green Schemes Never Work

by William Yeatman on May 13, 2009

in Politics

The DC Examiner yesterday reported on a “green” car sharing program in Montgomery County that is wasting taxpayer money hand over fist. Since January, the County has been paying Enterprise Rent-a-Car $1,100 a month per car for the use of 28 fuel efficient automobiles. As of April 24, the vehicles have been used a total of 83.5 hours, which means that Maryland taxpayers have paid more than $1,300 an hour to use the cars. For comparison, consider that a limo costs $60 an hour.

This is not the first lame brained green car scheme to go awry. A year ago, Bloomberg reported on a federal program to buy flex-fueled cars that can run on E-85, a fuel blend containing 85% ethanol. E-85 supposedly is less carbon-intensive than gasoline, so the program was meant to reduce greenhouse gases. However, there was one big problem: Federal employees found it more convenient to use gasoline than E-85, which isn’t availible in most fueling stations. As most flex-fueled cars are gas-guzzling sports utility vehicles, the program actually resulted in increased gasoline usage and higher greenhouse gas emissions. Whoops!

Al Gore 1984

by Cord Blomquist on May 13, 2009

[youtube:http://www.youtube.com/watch?v=t3XcIh_n6k0 285 234]

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